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UPDATED: JUNE 2010

113

INCOME EARNED

SELF-EMPLOYMENT OR SMALL BUSINESS INCOME

Description: Self-employment, small business or farm income is income that results from work activity on the part of the A/R, in which s/he is self-directing and receives compensation directly from the customer.

Policy: After allowable business expenses have been deducted, the remaining income is considered available earned income of the A/R and is subject to the appropriate budgeting methodology based on the category of the A/R.

References: SSL Sect. 366.2(b)

Dept. Reg. 360-4.3(c)

GIS

09 MA/025

01 MA/024

Interpretation: When an individual is self-employed or owns or operates a small business in which s/he is employed, certain costs related to the business or self-employment (e.g. the cost of materials, supplies, and labor) are deducted from the gross income for the purpose of determining eligibility for Medicaid.

Following are some of the items of business expenditures which are generally deductible from gross business income:

• Rental of quarters, equipment, or furniture; • Salaries and fringe benefits of employees; • Cost of goods for re-sale; • Business taxes, licenses and permits; • Cost of tools, supplies and raw materials; • Insurance for the business; • Lights, heat, water, sewage and telephone charges; • Advertising and travel; • Taxes and carrying charges on any property used in the business.

NOTE: For SSI-related A/Rs, depreciation costs for buildings, equipment and materials necessary for and directly related to the operation of the business are also deducted from gross income. Depletion, amortization and 179 expenses, which are types of depreciation, may also be deducted for the SSI-related.

(MRG)